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Takeaways from Senate's "Better Care Reconciliation Act"

June 23, 2017

Senate Republicans released their health reform overhaul yesterday after weeks of intrigue. IPS Advisors is extremely pleased to note that the legislation leaves the employer/employee "exclusion" from taxation on group health benefits untouched. Taxing employee premiums is a major threat during this process as Congress looks to increase revenue for the measure. We're also gratified that the "Cadillac Tax" on high cost health plans would continue to be delayed until 2025.

The fight going forward is going to be over the reoriented subsidies and Medicaid. There is nothing explicit that allows states to waive out of anything new but the general waiver requirements process has been expanded.

Highlights Include:

Zeros out individual and employer mandates

Modifies but keeps the individual credits; ties credits to age bands (5) and reduces eligibility to families under 350% of poverty line (from 400 before), but if you have access to employer coverage, you are ineligible with no requirement that the employer coverage be "affordable"

Eliminates small business tax credit regime for health care insurance after 12/31/19 AND between now and then small business health plans are ineligible for the credit if they cover abortion services

Generally repeals all of the taxes in effect after 12/31/17. The Medicare excise tax does not go away until after 12/31/2022 but net investment tax goes away effective 12/31/16.

ACA HSA and FSA limits repealed so back to the $5,000 caps

Other HSA reforms are same as in AHCA - increases the maximum contribution (to be equal to the plans out of pocket limits); allows spousal and catch-up contributions; and allows expenses incurred within 60 days of establishing an HSA to be covered. Does not deal with on-site medical clinic or telemedicine issue.

Eliminates federal MLR rebate regime after next year but requires each State to establish its own MLR regime with rebates

Most Significant Development: allows for the establishment of association health plans as large group plans for small businesses/individuals. These plans would be exempt from the community rating and essential benefit requirements imposed on small group and individual plans.

Click here for a chart comparing the ACA, AHCA, and the Better Care Reconciliation Act.

We'll continue to pass along updates as we learn more. In the meantime, if you have any questions or require assistance, please contact your IPS Advisors consultant.

Source: The Council of Insurance Agents & Brokers and their legal team Steptoe & Johnson.

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